Biden announces a student loan forgiveness policy

Today president Biden announced a new policy for student debt forgiveness.

I’d like to summarize what it offers, share some thoughts, then invite you all to comment.

The plan specifies amounts to be forgiven: “The Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients.” This only applies to people making under $125,000 per year.

The statement makes several points about timing. First, loan payments, which have been paused since Trump in 2020, are paused one more time, then will restart: “the pause on federal student loan repayment will be extended one final time through December 31, 2022. Borrowers should expect to resume payment in January 2023.”

Second, forgiveness is following that schedule — i.e., isn’t starting now:

The Department of Education will work quickly and efficiently to set up a simple application process for borrowers to claim relief. The application will be available no later than when the pause on federal student loan repayments terminates at the end of the year.

The Chronicle of Higher Education note on the announcement reminds us that this timeline may be too optimistic, as lawsuits may slow things down.

There’s an interesting and appealing part about reducing payments for some via